In contrast, Venezuelan crude can be bought with effective discounts of around $8-10 per barrel after the US eased sanctions against the country mid-October, people aware of the matter said.
Cheaper Venezuelan crude oil may start flowing to India from next month after three years as domestic refiners are moving away from Russia to more economical energy imports after sanction-hit Moscow drastically reduced discounts to around $2 a barrel, three people aware of the development said.
In contrast, Venezuelan crude can be bought with effective discounts of around $8-10 per barrel after the US eased sanctions against the country mid-October, they said, requesting anonymity. Discounts are generally with reference to the benchmark Brent crude, which fell about 1% to $78.56 a barrel on Friday. The downward trend continued on Monday as Brent fell by 0.22% at $78.39 in morning trade.
To meet India’s growing energy needs, New Delhi is not only diversifying its crude oil imports but is also making efforts to continue importing from old suppliers such as Venezuela, a company manager said. . India, the world’s third-largest crude oil consumer, imports more than 87% of its needs. He added that they are ready to establish supply links with any manufacturer at economical prices.
“Refineries have only purely commercial considerations when importing crude oil. Long before US sanctions hit India in 2020, Venezuela was one of the main crude oil suppliers. It became India’s third-largest crude oil supplier in 2012, with new refineries as the main supplier, set to process cheap but low-quality waxy Venezuelan crude, ” said the second person, a government official. Reliance Industries’ Jamnagar and Essar (now Nayara) plants were the two main buyers of Venezuelan crude at the time, and several state-run refineries later signed long-term crude supply contracts with Venezuela. PDVSA,Venezuela’s state oil company.
According to data presented to Lok Sabha on July 31, 2017, India’s imports from Venezuela increased to USD 11,729.89 billion in 2014-15, mainly due to crude oil purchases. sharp decline. global crude oil prices.
The average price of the country’s crude oil imports (Indian oil basket), which was $86.14 per barrel in 2014-15, fell by over 46% to $46.17 in 2015-16.
Due to the US sanctions, imports from Venezuela (over 90% of crude supplies) saw a sharp fall from $6.05 billion 2019-20 to $714 million in 2020-21. It plunged further to $334 million and $178 million in 2021-22 and 2022-23, respectively. Other than crude oil, India imported dye intermediates, iron, copper and lead from the Latin American country.
Both public and private sector refiners have started negotiating long-term, large volume contracts with PDVSA. Some have also contracted immediate supplies and they are on the way, the third person said.
“With Venezuelan crude available in the market and some Indian refiners expressing interest in purchasing discounted Venezuelan crude to diversify their imports and capitalize on refining margins at the expense of some sour Middle Eastern grades, India’s crude import strategy is at a crucial and intriguing phase,” said Sumit Ritolia, refinery economics analyst at S&P Global Commodity Insights, an information provider.
Due to heavy discounts, refiners will prefer Venezuelan crude compared to Russian crude, which once rose to one-third of the Indian basket from about 0.2% in 2022-23, the people said. Russia contributed over 35% of India’s total crude imports in 2023, amounting to 1.7 million barrels per day, according to S&P Global.
In December, Indian imports of Russian crude oil averaged 1.43 million barrels per day, reflecting a decrease of 150,000 barrels per day compared with November, and a significant drop of 620,000 barrels per day from the peak in May, which marked India’s highest monthly imports from Russia.
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